2nd Quarter Economic Growth Lower Than Expected

The second quarter of this year (April-June) saw a small growth rate of 2.5%, even though economists had originally predicted 4% and later downgraded it to 3%. This number is down slightly from what we saw in the first quarter, 2.7%.
http://www.marketwatch.com/story/second-quarter-gets-no-respect-2010-07-25?dist=beforebell

The second quarter is getting no respect. Only a few weeks ago, the quarter was strutting along the beach. Now even economists are kicking sand in its face.

The main focus on the data in the coming week will be the first estimate of growth in the April-June quarter.

Economists said the second quarter real growth probably came in at an annual rate of just 2.5%, down from the 2.7% rate in the first quarter.

And, as usual this time around, economists are divided on what this means for the future.

Economists are at odds over whether the loss of momentum in the second quarter will be long-lasting.

Jim O'Sullivan, chief economist at MF Global Inc, is optimistic that the weak "mini-cycle" may be coming to an end,

The stock market suffered its worst quarter in the three months ended in June since the collapse of Lehman Brothers. O'Sullivan said that concern over the health of Europe was the catalyst for the decline in stocks. Now both Europe and the stock market seem on firmer footing, he said. It may take the data a while to catch up, but there should be a turn-around.

On the other hand, Sung Won Sohn, a former Wells Fargo chief economist who teaches at California State University, said the second quarter may be the harbinger of more slowdown to come in the future.

"I think the economy is definitely slowing down and we are at the risk of falling into a long-term sub-par economic growth path for some time to come," Sohn said.

"We don't really have pistons pulling the economy forward and upward except government stimulus and inventories and these factors are going to be losing steam," Sohn said.

In my opinion, what we're seeing is not a recovery. We're sort of stuttering along, waiting for something to happen. And with all the policies coming out of DC making the business world even less hospitable than it already is, I think what happens next will be bad. The economy will stagger, for example, under the blows of massive tax hikes slated to take effect in January... assuming Democrats don't wise up and cancel the tax increases.

So I'm not optimistic, unfortunately.